Energy bills will soar as natural gas costs hit record highs after fire cut out crucial power cable between France and UK
Households and businesses are facing a rough fall and winter after a fire at a power station in Kent sent gas prices soaring to record highs.
Natural gas rose as much as 18 percent to 189p per therm following the fire at the interconnector, which links the UK and French grids.
Last night, National Grid warned that the disruption is expected to last until March, raising fears of tight supplies in the coming months.
Warming: Natural gas prices rose by a staggering 18 per cent to 189p per therm following the fire at the interconnector linking UK and French grids
An expert warned the country could face power outages if alternative energy sources such as coal failed to cover the shortfall. However, others said this was unlikely.
Yesterday, the incident exacerbated a price spike, which has already risen due to a toxic cocktail of lower stocks from Russia, lack of gas in storage in Europe and rising prices for liquefied gas transported in ocean tankers.
The 189p per therm is more than double the amount paid two months ago, and a fourfold increase from September 2020.
The price crisis is likely to put pressure on families and businesses during a crucial period of the post-Covid recovery.
Bills for domestic customers who don’t have flat rates could rise, although those with standard rates may not rise until the price cap is revised next spring.
But energy-hungry companies, such as manufacturers, are feeling the heat and are warning that companies will be forced to temporarily suspend production and may need to ration their energy.
It has also raised concerns about deliveries. The West Burton A coal station was set on fire earlier this month to meet electricity needs following a decline in wind.
Energy prices have already risen due to a toxic cocktail of lower supplies from Russia, lack of gas in storage in Europe and rising prices for liquefied gas transported in ocean tankers
But Tom Edwards of Cornwall Insight warned that ‘if something goes wrong, we might have nothing left in the back pocket’.
He added: “If a nuclear bomb goes offline or something big, it could cause problems because we might not have anything to replace it with.”
Verity Davidge, policy director at manufacturers association Make UK, said unprecedented energy costs “risk being a drag on any recovery”.
Davidge added: “About two-thirds of manufacturers say they are now feeling the impact of energy price increases, which, combined with inflation, higher raw material costs and wage pressures, are coming together in a perfect storm to bring the green shoots of the recovery so desperately needed into the economy. sector.’
Gareth Stace, director general of UK Steel, said excessive electricity prices have already forced some steelmakers to suspend operations.
The latest price hike brings back the picture of the decision in 2017 to close the UK’s main gas storage site. European leaders have urged ministers to reverse it.
This reduced the UK’s storage capacity from 15 days of winter demand to just four or five days, a move that relied on obtaining energy via submarine cables and liquefied gas imports.
Britain relies on six interconnectors to bring electricity to the UK, although the government is keen to build more.
The IFA 1, which was still on fire last night, produces two megawatts per hour, enough to power 2 million homes and more than the total amount generated by wind in the UK. It was operating at half capacity, or just one megawatt per hour, when it was hit.
European countries that have been unable to replenish their own gas supplies after a cold winter and lower supplies from Russia may consider cutting off access to the UK.
Experts also warn that price increases are making more small energy suppliers even more vulnerable.
Tom Lyon, energy director at Energy Helpline, said more could break in “a worst-case scenario.”